I Want To Be A $100 Million VAR
The Technology Group boasts annual gross sales of $25 million, but its president has even loftier goals. Building relationships with — and then landing — large chain accounts has put this two-year old company on track to quadruple its revenues by the year 2001.
"The first day I started my company in 1997, I made a sale," says David Cauble, president of The Technology Group (TTG)(Carrollton, TX). The customer was Furth Pharmacy, a 24-store chain based in West Virginia. Furth had been Cauble's customer when he worked for another reseller, prior to starting TTG. "I called my contact at Fruth and explained that I had started TTG," says Cauble. "My contact said, 'Funny thing — I need four adapters.'"
"The adapters only cost $25 each. That sale, however, instantly validated that I was going to be successful. My customers didn't mind that I had started my own business. They followed me. That was a very good feeling."
"I want to grow my business to $100 million in gross sales," states Cauble. The timeframe for reaching that goal? As soon as possible. His plan? Add 15 people to his existing staff of 37 and focus on winning — and keeping — large chain accounts in the hospitality, retail and pharmacy markets.
Furth Pharmacy is still a TTG customer. So are more than 800 restaurants owned by Brinker International. Brinker's concept restaurants include Chili's Grill & Bar, On The Border, and Romano's Macaroni Grill. In less than two years, TTG moved from point "A," a fledging new VAR business, to point "B," a $25 million VAR business with several large, chain-store accounts. The process had its disappointments, says Cauble. Although he admits, somewhat philosophically, the disappointments were learning experiences, almost blessings in disguise.
Learning From A Disappointment
One of Cauble's biggest disappointments came early in his TTG career. "Three of us were working out of my house at the time," he says. "We bid on a project to sell 1,500 servers to Kmart. TTG, along with NCR, made the final cut. We lost. It was a huge disappointment because having Kmart as a customer could have been a tremendous start. The project was worth $30 million." He realized, however, that had his new company won the bid, the Kmart project might have been overwhelming for the three-man operation. "The project, if we had done it, but not done it well, could have caused the company to fail," notes Cauble.
Cauble and his coworkers analyzed the loss. "In the case of Kmart, we didn't have a strong relationship with the company," he says. "We learned that if we wanted to be the winner when it came to these large accounts, we had to focus on relationship selling. It's not the price at which you sell your products, or the services you offer. It is the fact that your customers can trust you that makes the difference."
What Makes For Good Customer Relations?
TTG has moved its location several times since its inception. From Cauble's house, the company moved into a 3,000 sq. ft. office, then grew into 6,000 sq. ft. of office space again into 9,000 sq. ft. of space. TTG recently relocated its operations to a new, 22,722 sq. ft. building. Cauble has nine salespeople, including himself, working in various markets.
Winning a chain account, such as Brinker's is a time-consuming, lengthy process, according to Cauble. "It took us a year-and-a-half to get firmly into Brinker restaurants. It happened little by little. Our first business was to supply POS-related products and PC sales. Most recently, TTG was awarded the Y2K-compliance retrofit project for Brinker's POS systems throughout the country. Now, the competition would have to jackhammer us out of that account."
"Large accounts, such as Brinker International, can work with any POS VAR they want," says Cauble. "While our capabilities will get us in the door, our relationship with the company helps keep us in the door. Part of the relationship building can include a few rounds of golf or a lunch now and then with our customers," notes Cauble. TTG pays membership dues for its salespeople to belong to various groups, including the Las Vegas Chamber of Commerce (the company is moving into gaming) and the National Restaurant Association. "The salespeople decide how much their involvement in a group will benefit sales," says Cauble.
So what does Cauble do to make sure no one jackhammers him out of a large account? "We don't try to fit our customers into a box when it comes to service. We have a 'free range' approach," says Cauble. "In order for us to win the next big deal, we have to offer customers service they feel is unique to them. For example, one restaurant chain needs us to keep in stock every piece of equipment it uses — entire POS systems. Another chain account just wants the assurance that, in the event of an emergency, we can deliver overnight replacement products such as kitchen printers."
Cauble takes a realistic approach when it comes to giving his customers what they want — the request has to be reasonable. "If a customer wanted us to water the plants in all their stores, we'd have to say no. We can do it, but for $150-per-hour, it's not a good use of our time," he laughs.
Pains Of A Growing Business
As TTG continues to grow, Cauble has had to change the way he runs his business. "When it was just three guys in my house, we took more risks. Now, with 37 employees, it's harder to make decisions. It's like having a wife and 36 kids to feed. You weigh decisions more carefully." He's also hired a consultant to write formal policies and procedures, something TTG has never had.
"When the company was smaller, if you were sick, you stayed home," explains Cauble. "With 37 people to track, we need a vacation policy, a sick-time policy and many other policies," explains Cauble. The rapid growth of TTG has distanced Cauble somewhat from his staff. "It's sad. There are people working for me who I don't get to know very well. They're busy doing their thing; I'm busy doing mine."
Busy indeed. On track toward his goal of $100 million in gross sales, Cauble continues to attract chain accounts. TTG recently added Blockbuster Entertainment to its client list. And Kmart is now a TTG client as well. But these days, winning big accounts comes with a bigger price tag. "When you win the business, the win isn't as big anymore. If you fail to provide the level of service you promised, you can lose a hell of a lot of money — and now you have more mouths to feed. Knowing this colors your decisions and can weigh heavily on you."
It's the price you pay for wanting to be a $100 million VAR.